ACT 5140 – Accounting
for Decision Makers
HW #3 – Chapter
10
Directions:
Please submit your work in Word or PDF
formats only. You can submit an
Excel file to support calculations, but please “cut and paste” your solutions
into the Word or PDF file. Be sure to show how you did your calculations. Also,
please be sure to include your name at the top of the first page of your file.The
assignment is due by 11:59 PM on November 12. Please run spell check and
proofread your answers. If you have any questions, please e-mail me at af878@nova.edu or andrew.felo@gmail.com. Good luck!
Question #1
Evaluate
the following statements concerning variance analysis. Be sure to provide specific examples to justify your evaluations.
a)
When
evaluating variances, it is best for managers and others to consider one
variance at a time rather than groups of variances together.
b)
“Favorable”
variances represent good performance and “unfavorable” variances represent bad
performance.
Question #2
|
Expected production (units) |
30,000 |
|
Standard DML hours per unit |
7.00 |
|
Standard DML rate per hour |
$25.00 |
|
Standard pounds of DM usage per |
4.00 |
|
Standard DM price per pound |
$15 |
|
Actual |
|
|
Units produced |
27,000 |
|
DML hours worked |
202,500 |
|
Total cost of DML |
$4,860,000 |
|
Pounds of DM purchased |
118,000 |
|
Total cost of DM purchased |
$1,858,500 |
|
Pounds of DM used |
101,250 |
a)
Calculate the following variances:
Direct manufacturing labor rate
variance
Direct manufacturing labor usage
variance
Direct
materials price variance
Direct materials usage variance
b)
Explain what each of the calculated variances imply about the firm’s
operations. Be specific!
Direct manufacturing labor rate
variance
Direct manufacturing labor usage
variance
Direct materials price variance
Direct materials usage variance
